Printing services getting outsourced to cut costs

Ford Motor Co. estimates that its maintenance and support costs for office printing are in the range of US$40 million to US$50 million. But that’s only an estimate. While Ford knows how many PCs it has — 172,000 — it can’t say for certain how many printers are installed.

“The reality is, we don’t know how many devices we’ve got,” said Clive Johnson, Ford’s European deskside services manager. But based on its studies and pilots, the automaker maintains that under its recently signed agreement with Hewlett-Packard Co., it can reduce printing costs by 20 per cent to 30 per cent.

Johnson said he’s become so aware of the cost of printing that when he sees papers in a wastebasket, “I don’t see paper in there, I see dollars in there.”

Ford officials last week shared details of a printer outsourcing agreement it signed with HP, which follows pilot projects at Ford facilities in London and Dearborn, Mich. Ford and HP officials declined to disclose the value of the contract, however.

Ford is one of the largest and most visible companies to outsource its printing services. But analysts say there’s accelerating interest in improving printer management, and in many cases, companies may choose to outsource.

“The problem that Ford has is very, very common,” said Ken Weilerstein, an analyst at Gartner Inc. in Stamford, Conn. Most companies don’t know how much they are spending, he said, adding, “They don’t really know how they are using the equipment, and they really can’t pinpoint the benefit from what they’ve got.”

Gartner estimates that by the end of next year, 60 per cent of companies will have undertaken initiatives to cut document printing costs. “It is very much the topic of interest,” said Weilerstein.

Ford has a proliferation of printers that came into the company “one way or another,” said Johnson. These printers aren’t managed and are often ink-jet models, which are cheap to buy but expensive to run, he said.

The company began looking at options several years ago, examining multifunction devices that can scan and fax as well as print, but it felt that the technology wasn’t mature. That opinion has changed.

HP will install multifunction laser printer devices that can be networked, giving Ford the ability to monitor printer use through a portal. Ford employees will replace paper and toner, but HP will manage the remaining functions.

Printer outsourcers are paid in a variety of ways, from per page to fixed rates. But key to any payment method is having a view into how printers are used, users said.

Tim Armstrong, chief financial officer and former CIO at Vinson & Elkins LLP, has outsourced printing operations for the past three years to Lexmark International Inc. in Lexington, Ky. Attorneys at the Houston law firm print about 30 million pages annually. Printing costs used to account for about five per cent of its IT spending; it’s now about 2.9 per cent to 3.2 per cent. Armstrong said he believes costs will decline further as the firm installs more shared printers.

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